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The owner of HomeTown Buffet and other buffet dining chains filed for chapter 11 protection, blaming a lawsuit that was not disclosed when its current owner bought the businesses in August, Reuters reported yesterday. Buffets LLC, an affiliate of Food Management Partners, in August paid an undisclosed amount for the chains Old Country Buffet, Ryan's, Fire Mountain and Tahoe Joe's, in addition to HomeTown, according to Food Management Partners' website. Those chains, which operate 150 restaurants, were part of the bankruptcy filing yesterday, according to court documents. The firm that sold the restaurant chains in August did not disclose a pending lawsuit, which resulted in an $11.4 million judgment, according to a statement from Peter Donbavand of San Antonio, Texas-based Food Management Partners.

Fresh & Easy LLC cleared a number of major hurdles yesterday when a bankruptcy judge agreed to shield the former supermarket operator from several potentially onerous and expensive lawsuits, Dow Jones Daily Bankruptcy Review reported today. Following a hearing yesterday, Bankruptcy Judge Brendan Shannon denied two class-action requests from former employees who sued the company, saying the litigation "would disrupt the progress of the case." Fresh & Easy filed for chapter 11 in October and has since been working to sell off its stores and other remaining assets, a process that is "well underway," the judge said. The former employees sued Fresh & Easy for paid-time-off benefits they say they are owed and for allegedly failing to properly notify them of the abrupt loss of their jobs when the grocer shuttered its stores.

Lenders are giving Sports Authority Inc. until the end of April to find a buyer and close a deal to save part of the ailing retail chain, which sought bankruptcy protection yesterday, the Wall Street Journal reported today. Nearly 140 stores are already being sacrificed to appease lenders owed more than $1 billion and more may be closed unless the company finds a buyer or manages to put together a turnaround plan, court papers say. Ahead of a bankruptcy court hearing today, Sports Authority sketched out its strategy of pursuing a dual-track process, negotiating a chapter 11 reorganization plan while looking for a buyer. However, $595 million in bankruptcy loans come due June 30, which doesn’t give the beleaguered retailer much time. Chief executive Michael Foss said Wednesday that parties have expressed “strong interest” in buying or investing in some or all of Sports Authority. Read more. (Subscription required.) 

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Sports Authority Inc. said that it filed for chapter 11 protection today, making it the first major U.S. retailer to file for bankruptcy this year, Reuters reported today. The sporting goods retailer said today that it expects to have access to up to $595 million in debtor-in-possession financing during its restructuring. Sports Authority said that it had identified about 140 stores and two distribution centers, in Denver and Chicago, that it intends to close or sell as part of its restructuring plan. The company listed assets worth up to $50,000 and liabilities of between $1 million and $10 million in its filing with the U.S. Bankruptcy Court in Delaware. Sports Authority was expected to file for bankruptcy after it missed a $20 million coupon payment on Jan. 15, triggering a 30-day grace period to work out a compromise with creditors, Reuters had reported last week.

Dismal holiday results from retailers are prompting executives across the industry to shrink or adapt their stores, and rethink the cost of growing their online operations, the Wall Street Journal reported today. Kohl’s Corp. said yesterday that it would close 18 stores after reporting weak sales, while Sears Holdings Corp. is looking to sell $300 million in assets after reporting yet another loss. Best Buy Co. warned of weak demand for electronics, and shares of Restoration Hardware Inc. plunged as much as 29 percent yesterday after it blamed poor sales on a “pullback by the high-end consumer.” Declining shopper traffic is prompting companies such as Macy’s Inc. and Wal-Mart Stores Inc. to close low-performing locations this year. The shift to online shopping also is vexing chains: Nordstrom Inc. said that it would curtail technology spending after profits fell 29 percent last quarter, in part because of costs related to Web sales.

Sporting goods retailer Sports Authority Inc. intends to file for bankruptcy as early as next month, an action that would expedite the closing of some of its 450 stores across the United States, Reuters reported yesterday. Sports Authority missed a $20 million coupon payment on Jan. 15, triggering a 30-day grace period to work out a compromise with creditors. Moody's Investors Service downgraded the retailer's credit ratings yesterday, and said that it views the missed interest payment as a limited default. The grace period expired on Feb. 14. The Englewood, Colo.-based company's bankruptcy plans underscore the challenges the fragmented sporting goods industry faces as it competes with discounter Wal-Mart Stores Inc. and online retailer Amazon.com Inc. Ahead of the bankruptcy filing, Sports Authority is trying to work out a deal with creditors for a loan to get the company through bankruptcy, and line up liquidators for the 150 to 200 stores it plans to close.

Fairway Group Holdings Corp., the New York gourmet grocery chain that once had ambitions of a nationwide expansion, is approaching default after years of red ink, Bloomberg News reported on Friday. After gorging on debt to finance its growth plans, the company is now at risk of breaching its credit covenants when its fiscal quarter ends on April 3, according to report by Moody’s Investors Service analyst Mickey Chadha. And even if Fairway gets a reprieve from its obligations, its capital structure remains unsustainable, Chadha wrote. To bring its operations in line, analysts are advising the company to halt its plans to expand beyond its New York base. The chain has already pulled out of leases in lower Manhattan and the new Hudson Yards complex under construction on Manhattan’s Far West Side. Of its 15 stores, seven are in Manhattan, Brooklyn and Queens, with the rest outside the city in places such as Pelham Manor, N.Y., and Paramus, N.J.

A courtroom clash between failed supermarket operator Fresh & Easy LLC and its creditors appeared headed for mediation yesterday, but the overall direction of the company's chapter 11 case was clouded by looming legal battles with former employees, Dow Jones Daily Bankruptcy Review reported today. Appearing before Bankruptcy Judge Brendan Shannon, lawyers for Fresh & Easy tackled a number of roadblocks that threaten to drag out the bankruptcy proceeding and run up legal bills. The grocer's unsecured creditors are seeking greater access to information about the company's past business transactions, including the alleged transfer of at least $40 million in real-estate assets from Fresh & Easy to an affiliate of its private-equity backer Yucaipa Cos. But uncovering that information could be costly for the company, as could any future lawsuits it might trigger. Lawyers for Fresh & Easy and the judge said they hoped to avoid "bogging down" the case and to work toward a settlement that would put the dispute with unsecured creditors to rest.

Supporters of online sales tax legislation have been promised a vote in the Senate this year, but the timing is vague and House consideration is uncertain, The Hill reported today. To secure considerations of the online sales tax bill known as the Marketplace Fairness Act, advocates traded away one of their major bargaining chips by allowing a separate long-term ban on local Internet access taxes from going forward. “The Speaker has told me that he is going to bring up Marketplace Fairness on the House side. So we are going to vote on it before the end of the year. It is going to be the law anyway,” Senate Minority Leader Harry Reid (D-Nev.) said on Thursday. Senate Majority Leader Mitch McConnell (R-Ky.), who opposes the bill, told reporters that he too believes Speaker Paul Ryan (R-Wis.) told House colleagues that they would get an opportunity to vote on the legislation. Ryan’s office, however, said the Speaker had made no commitment nor had he set a timeline. The bill would give states more authority to tax purchases made online, even when someone in their state buys the online item from a retailer with no physical location in the state.